The UK inflation rate rose to 1.8 per cent in January – the highest rate recorded since June 2014, official figures show.

The Office for National Statistics (ONS) said January's rise compares with a 1.6 per cent rise in the year to December 2016.

January's inflation figure is the fourth consecutive month inflation has risen and to the highest level recorded since June 2014, when Consumer Prices Index (CPI) inflation rose to 1.9 per cent.

An additional inflation measure, CPIH – which includes a measure of owner occupiers’ housing costs and Council Tax – rose to 2.0 per cent in January compared with a 1.7 per cent rise in the year to December 2016.

The CPIH measure will become the ONS headline inflation measure and the focus of the commentary in this statistical release from March 21, 2017, though it will continue to publish the Consumer Prices Index “at the same level of detail” and certain retail price-related indices will be discontinued.

Driving the increase in CPI in January was transport and motor fuel, and to a lesser extent food prices, which were unchanged between December 2016 and January 2017, having fallen a year ago.

Motor fuel prices rose 3.4 per cent between December 2016 and January 2017, having fallen by 2.6 per cent a year earlier.

The ONS said transport services, notably transport by air, road and rail, also inflated CPI in January as collectively prices fell by less than they did a year ago.

Food price deflation “lessened considerably” in the last four months and the 12-month inflation rate was -0.4 per cent in January 2017, its highest since June 2014.

A measure given by the ONS is a basket of goods and services which cost £100.00 in January 2016 would have cost £101.80 in January 2017.

The ONS said upward pressure in January was partially offset by year-on-year price falls in clothing and footwear.

Scottish Chambers of Commerce chief executive Liz Cameron, looking for a sign that UK Government will tackle business costs

Commenting on the latest CPI figures, Scottish Chambers of Commerce chief executive, Liz Cameron, said: “Businesses are expecting rising prices throughout this year and we now know that the Bank of England is expecting inflation to be positioned significantly above the government’s 2.0 per cent target for at least the next three years.

“There are a number of factors which are pushing prices up, including rising oil prices and exchange rates in the wake of the EU referendum.

“The danger for business is that they may be forced to pass on rising costs to customers at a time when real income growth, and consumer spending, is likely to slow.

“For some businesses, this will add to the pressure of business rates, the Apprenticeship Levy, new pension responsibilities and the rising cost of the national living wage.”

Economic forecaster the EY ITEM Club said it is sticking with its outlook of CPI heading towards 3.0 per cent in the second half of 2017.

Martin Beck, its senior economic advisor, said: “Although CPI inflation rose to the highest rate since June 2014, this represented a downside surprise.

“That inflation did not come in higher was largely due to heavy discounting in clothing stores.

“The petrol category continued to exert significant upward pressure on inflation, due to both base effects arising from last winter’s sharp drop in the oil price and price rises this January.

“And pressures continued to intensify in the supply chain, with both input cost and output price inflation reaching new multi-year highs.

“Overall, though January’s inflation reading was lower than anticipated, this does not alter the outlook.

“We are likely to see the effects of a weaker pound steadily pass along the supply chain to consumers, driving the CPI measure up towards 3.0 per cent in the second half of this year.”

Alex Brandreth, senior fund manager at Brown Shipley, said that over the last few years may people had been better off because wage inflation had been higher than retail price inflation.

“But over 2017 wages are unlikely to keep pace with inflation, which means that in real terms we are all likely to feel worse off,'' he said.

Brandreth added: “Milton Friedman said that inflation is ‘the one form of taxation that can be imposed without legislation.’

“That tax to the consumer is rising – CPI in the UK has increased to 1.8 per cent and RPI [Retail Price Inflation] released today was 2.6 per cent.

“This is the highest inflation reading in the UK since August 2014.”

Shilen Shah of Investec Wealth & Investment, said: “Despite the headline CPI coming in slightly below consensus in January at 1.8 per cent (consensus: 1.9 per cent), there are clear signs that inflationary pressures are building in the UK economy with import prices increasing by 20 per cent year-on-year, with crude oil leading the charge.

“The Bank of England’s currently neutral stance is significantly supported by its latest estimate about the amount of spare capacity in the economy, however if the path of CPI is stronger than it currently estimates, we may eventually see a stronger reaction from the central bank.”